PSR consultation on A new reimbursement requirement: Faster Payments APP scam reimbursement rules and operator monitoring

Summary:

• We agree that the PSR should introduce a general direction on all payment service providers (PSPs) to reimburse their customers, as well as a specific requirement on Pay.UK to introduce the reimbursement requirement into Faster Payments rules. This approach will ensure that the reimbursement requirement applies to all in-scope PSPs as soon as it is in place, and that the regulator directly enforces firms’ compliance with the relevant rules.
• The PSR’s policy on the consumer standard of caution and the related reimbursement exception should be defined in its general direction on PSPs rather than in a separate policy statement and guidance. The general direction should also specify that the burden of proof should be on the PSP to prove that the consumer acted in a grossly negligent manner.
• The PSR should always retain responsibility for setting the consumer standard of caution and the reimbursement exception. If the PSR’s policy on consumer standard of caution and the exception were to become Pay.UK’s responsibility, Pay.UK could make fundamental changes that could undermine the outcomes the PSR expects. Instead, the PSR should retain control of this contentious and crucially important policy area, and ensure that PSPs comply with this policy.
• The PSR should require Pay.UK to make its compliance monitoring regime and enforcement policy publicly available. As the operation of the PSR’s reimbursement requirement by Pay.UK will be of key interest to Faster Payments users, the regulator should require Pay.UK to make its compliance monitoring and enforcement policy transparent and accessible. Faster Payments rules should also be made publicly available, especially given that Pay.UK is the body tasked with amending its own scheme rules to include the new requirement. This should be expressly included in the specific requirement and specific direction to Pay.UK.
• The reimbursement requirement must be implemented by all PSPs without delay. Discussions around introducing consistent minimum standards for reimbursing APP fraud victims have been long-running, and many large firms already have experience reimbursing their customers under the voluntary Contingent Reimbursement Model (CRM) Code. They also already have established procedures for appropriate bilateral data-sharing with regulators and other organisations. With victims having to shoulder a third of all APP scam losses, it is crucial that these new protections are made available to consumers as soon as possible.
• The Bank of England should take a similar approach to implementing a reimbursement requirement within the CHAPS payment system. We would support the Bank and the PSR taking a consistent approach to implementing a reimbursement requirement into the CHAPS system, via a rule-change and a direction on PSPs. The PSR should also introduce a reimbursement requirement for APP scams that take place via international transfer.